that requires the entity to replace defective parts and Sony Company sells stereos under a 2-year warranty contract During 2020, 1,000 units were sold at P9,000 each. provide free labor on all repairs. In 2021, the entity sold an additional 900 units at P9,250 each. Sales occurred on the last day of the year for both 2020 and 2021. Based on past experience, the estimated 2-year warranty costs are P200 for parts and P250 for labor per unit. It is also estimated that 40% of the warranty expenditures will occur in the first year and 60% in the second year. Actual warranty expenditures were: 2021 2022 Stereos sold in 2020 Stereos sold in 2021 180,000 280,000 190,000 Required: 1. Prepare journal entries for 2020, 2021 'and 2022. 2. Analyze the estimated warranty liability to prove the reasonable accuracy of the balance on December 31, 2022. 3. Prepare the adjustment of the estimated warranty liability on December 31, 2022.

that requires the entity to replace defective parts and Sony Company sells stereos under a 2-year warranty contract During 2020, 1,000 units were sold at P9,000 each. provide free labor on all repairs. In 2021, the entity sold an additional 900 units at P9,250 each. Sales occurred on the last day of the year for both 2020 and 2021. Based on past experience, the estimated 2-year warranty costs are P200 for parts and P250 for labor per unit. It is also estimated that 40% of the warranty expenditures will occur in the first year and 60% in the second year. Actual warranty expenditures were: 2021 2022 Stereos sold in 2020 Stereos sold in 2021 180,000 280,000 190,000 Required: 1. Prepare journal entries for 2020, 2021 'and 2022. 2. Analyze the estimated warranty liability to prove the reasonable accuracy of the balance on December 31, 2022. 3. Prepare the adjustment of the estimated warranty liability on December 31, 2022.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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